Suppose John finishes school and immediately gets a part-time job.The measured unemployment rate would

Question

Quizplus · Accepted Answer

The unemployment rate measures the percentage of the labor force that is unemployed. When John was in school, he was not in the labor force, so he was not counted as unemployed. As soon as he gets a part-time job, he joins the labor force, which means the labor force increases by one person. Since John has a job, he is no longer unemployed, so the number of unemployed people would stay the same. Therefore, the unemployment rate would fall because the denominator of the formula (labor force) has increased while the numerator (unemployed) remains constant.

Suppose John Finishes School and Immediately Gets a Part-Time Job